Covid-19 made a tough hiring situation even tougher, and the fallout continues to be felt by some mattress manufacturers
While the Covid-19 pandemic has affected the mattress industry in myriad ways, from supply chain slowdowns to material shortages, one of the most persistent and frustrating issues has been the shortage of reliable workers to staff factory floors and drive trucks.
Since the onset of the pandemic in 2020, the United States workforce has seen declines. In fact, according to data from the US Bureau of Labor Statistics Current Employment Statistics (CES) survey, non-farm payroll employment in the United States declined by 9.4 million in 2020, the largest calendar-year decline in the history of the CES employment series.
And manufacturing was particularly hard as Covid shutdowns and supply chain disruptions forced factories to close. During 2020 alone, manufacturing netted a loss of 578,000 jobs — a figure that represents nearly six years of job gains — according to the US Bureau of Labor Statistics.
“The pandemic caused a decline in employment in all industries,” says Enrique Lopezlira, director of the Low-Wage Work Program at the UC Berkeley Center for Labor Research and Education in Berkeley, California. “There was a huge drop in manufacturing employment in California and at the national level. It has been rebounding over the last year, but not enough to make up for the decline.”
Manufacturers in the mattress industry have certainly felt that disparity as they struggle to keep up with consumer demand for their products.
“It is still very difficult to find people, retain them and get consistent attendance,” says Gerry Borreggine, president and chief executive officer of Therapedic International, a licensing group based in Princeton, New Jersey. “Raising the starting pay by even 50% compared to pre-pandemic levels has only helped a little. Finding truck drivers is like winning the lottery. All around, labor continues to be a challenge.”
Steve Karns, regional vice president of Bedding Industries of America, says BIA tried everything in the early days of the pandemic. “We put out advertisements in Spanish. We put out advertisements in English. We did Facebook posts. We put bonuses in place for referrals from our employees. We created bonuses for new employees who stayed 90 days,” he says. “We were in dire need. We couldn’t keep up with natural attrition.”
Even companies with a well-established labor force struggled during the pandemic.
“Covid has been a tremendous challenge,” says Richard Diamonstein, managing director of Norfolk, Virginia-based Paramount Sleep Co. “We benefit from an experienced workforce with an average tenure of 12 years. But did we have a lot of problems with people showing up? Absolutely. Did we have a lot of problems with finding people? Absolutely.”
Although the pandemic has begun to ease again after spikes due to the Delta and first Omicron variants, some companies are still struggling to find workers to fill manufacturing roles. The persistence of the worker shortage has the potential to wreak long-term havoc on the state of manufacturing in America. According to a 2021 manufacturing talent survey from Deloitte and The Manufacturing Institute, US manufacturing is expected to have 2.1 million unfilled jobs by 2030.
“Now the issue is high demand for goods, including manufactured goods, and firms having a hard time filling the positions as fast as they need to keep the supply chain working,” Lopezlira says.
As manufacturers scramble to fill openings and keep up with that demand, many are left wondering why this problem continues despite their best efforts to recruit and workers.
Roots of the problem
Some workers haven’t returned to work in manufacturing jobs due to continued concerns about Covid — particularly those who are or live with people who are at a higher risk for adverse reactions to the virus. Others are less directly affected by the pandemic.
“Some people reassessed their work situation and decided they wanted to be in a different industry,” Lopezlira says. “Other people had to exit the labor force to care for children or elderly relatives that need care, and they might not be able to be back in the workforce yet.”
Lopezlira says the pandemic also prompted many Americans to retire early. According to a Pew Research Center analysis of labor force data from the third quarter of 2021, 50.3% of US adults 55 and older said they were out of the labor force due to retirement. In the third quarter of 2019, before the onset of the pandemic, 48.1% of those adults were retired.
And while the federal government’s economic relief efforts such as stimulus checks and illness expanded benefits initially caused some to delay returning to work, most of those programs expired months ago. The final economic stimulus check came in March 2021, expanded unemployment benefits expired in September 2021, and advance Child Tax Credit payments discontinued at the close of 2021.
With so many job openings across industries, competition for workers has become stiffer than ever.
“In staffing, it seems that our factories are paying more for similar quality, sometimes with worse work ethic,” Borreggine says. “They also find themselves competing with other industries more than ever as the labor issue poses challenges across the US, almost regardless of industry.”
Brad Rogers, senior vice president of bedding for Arcadia, Wisconsin-based Ashley Furniture Industries, also notes the shift in competitors.
“We’re facing competitors in fast food who pay daily,” he says. “Obviously, we face our challenges there. Fortunately, we’ve got a good core group of people.”
Rules of attraction
With such a tight labor market, manufacturers have gotten more creative and made larger investments to attract new employees and to retain current workers.
“We are definitely seeing increases, and part of that is a lot of states’ minimum wage went up this past year,” Lopezlira says. “But we’re also seeing employers unilaterally increasing wages to attract workers.”
Karns agree. “The cost of labor is definitely up,” he says. “Overtime, too.”
In addition to raising hourly rates, Ashley began offering signing bonuses, retention bonuses and increased pay to stay competitive, Rogers says.
Paramount increased its base rates and pay for some key personnel. It also instituted a monthly gift card for 100% attendance and gave out 30 last month out of a staff of 90. “People are proud of it,” Diamonstein says.
Therapedic has increased wages and benefits, along with offering a variety of bonuses to attract new workers and keep current employees happy.
“Pumped up benefits, increased wages to higher than average levels, offering sign-on bonuses, retention bonuses, employee referral bonuses, and hosting appreciation events are all strategies that have been utilized to differing degrees by each of our factories,” Borreggine says.
BIA, Ashley, Paramount and Therapedic aren’t the only companies upping their pay to lure workers. According to the US Bureau of Labor Statistics, average hourly earnings for production and nonsupervisory employees in the furniture and related product manufacturing sector have consistently ticked up during the past few months from $20.13 in October 2021 to $21.03 in January 2022. That’s significantly higher than the national average hourly wage, which according to Statistica stood at $11.22 in January 2022.
Wage increases yet another expense for manufacturers already stretched thin by exorbitant increases in shipping fees and raw materials due to the pandemic and other problems. And while bedding sales are generally good, not being able to manufacture products as quickly as before the pandemic makes managing expenses trickier.
High wages aren’t the only consideration for potential employees in today’s competitive labor market. Robust benefit packages, with extras beyond the typical medical insurance and paid leave, have become an important tool in recruiting and retaining skilled workers. Company culture is also important, particularly for younger workers, who tend to want greater flexibility and to know they are part of an organization that is just as committed to doing good in the world as it is to making a profit.
“Another part of the issue is the quality of the jobs, so employers are offering other kinds of benefits like tuition for education or maybe increasing the amount of paid leave,” Lopezlira says. “But unfortunately, that’s not uniform, and there are a lot of jobs that don’t offer those benefits. A lot of workers are looking for not only a higher wage, but also a better quality job.”
Borreggine says Therapedic’s factories have rethought how they approach the recruitment process, as well as how they reward employees who remain loyal to the company.
“Some are moving long-term workers into more managerial lead roles, and some have started using multiple temp and employment agencies to reduce the burden of the onboarding, terminating, recruiting cycle,” he says. “But still, nothing seems to be working to the extent needed.”
As more Americans get vaccinated against the coronavirus and restrictions loosen, many feel hopeful that the US staffing shortage will ease. But how quickly that will happen remains uncertain. In the meantime, analysts like Lopezlira believe infusions of funding from government programs could help companies revamp their manufacturing operations to attract new employees.
While workforce analysts like Lopez-lira remain hopeful, for manufacturers on the front lines of the labor shortage, relief can’t come soon enough. And while they want to be optimistic, some manufacturers in the mattress industry don’t foresee the situation changing for the better anytime soon.
“Most do not see it improving anytime in the near future, and some even anticipate it getting worse before it gets better,” Borreggine says. “We wish we had a crystal ball, but many hope people will be more committed to working consistently.”
Some companies have looked for solutions outside of staffing to keep production up.
At ISPA EXPO, equipment companies introduced a number of machines for material handling, automation and deskilling processes. (See story on page 34.)
Paramount recently bought two pieces of equipment to semi-automate its process. “Doing things like that means the training curve is days instead of months or years,” Diamonstein says.
BIA reexamined its plant organization, changing the flow of the shipping department. “What it forced us to do is become a more efficient manufacturer,” Karns says. “We realigned our factory so we could get more pieces out with less people.”
BIA also cross-trained its employees, so that each person could easily do three jobs.
“When you can’t get labor, you’ve got to be creative,” Karns says. •